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Mad as Hell:

The CRTC Steps in to Discipline Canada's Wireless Marketplace

 
   

February 2013 - IGB Grant +1 514 849 3508, Amit Kaminer +1 416 413 1636 and Lindsay Shaddy

   
    OVERVIEW  
 

 

 

Last fall, the Canadian Radio-television and Telecommunications Commission (CRTC) asked the Canadian public to help the Commission create a national code of conduct for wireless services. Ask and thou shalt receive! When it comes to wireless services, Canadians are not bashful about airing their concerns.

The CRTC is now seeking further public comment and is specifically asking the public, “Is anything missing?”

Well, yes, something is missing, although the CRTC’s draft code is a good start. The industry agrees. Indeed, it is oddly unanimous in its support, although there is some debate about the details. But it is only a start. The code isn’t ready for promulgation. In SeaBoard’s view, the Commission’s draft code has missed the elephant in the room: the three-year contract term.

And then there is the question of pre-paid/pay-in-advance services: There really is no point in applying remedies designed for long-term contractual relationships to the short-term relationships in the prepaid marketplace, where customers can vote with their feet on a monthly basis. To apply the same prescriptions to all forms of wireless customer relationships makes little sense. In the case of prepaid contracts, such an approach runs the risk of adding costs and complexity to an economic model that isn’t broken.

The Commission has chosen to address some of the impact of the three-year term by focussing on termination fees and contract clarity. Both are facets of the marketplace experience that will benefit from the Commission’s code. But don’t stop there. Yes, there are consumer penalties that can be addressed in the short term through fine-tuning, through warnings of approaching limits, and through more transparent calculation of the economic repercussions of early termination, but that isn’t the real elephant.

We believe that the most serious downside of the three-year contract term is that it stifles the industry by constraining consumer choice and the frequency of those choices. It slows the evolution of the marketplace, which does a disservice to consumers generally by fettering those very companies whose products and services were supposed to introduce balance into the marketplace. These are the same companies fostered by our virtual industrial policy of looking to competition to provide marketplace balance.

Our advice to CRTC Chairman Jean-Pierre Blais: Address the three-year term. Do away with it – make a third year an option if you must, and make the device subsidy portable.

 

 
   


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Friday, 17 August 2018

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